BRW richlister Tim Gurner has labelled Melbourne's inner city suburbs under-supplied with apartments after snapping up an entire suburban block in Collingwood, about three kilometres north-east of the city centre.

In a deal worth more than $40 million Mr Gurner has struck agreements with the private owners of a 5100 square metre site between Wellington and Cambridge streets that includes a massive 200 metres of frontage.

The site incorporates numerous older commercial warehouse buildings, some of which house the hospital set used for the filming of television hit Offspring, as well as a car park.

Sydney architecture firm Koichi Takada Architects has been appointed to design the $300 million Wellington Street project, which will include more than 400 apartments along with extensive ground-floor retail.

The acquisition means Mr Gurner now has eight projects either under construction or in development in the gentrifying former industrial suburbs of Collingwood and Fitzroy, including a future pipeline of 1250 apartments.

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Melbourne's inner city under-supplied

"We spend a lot of time analysing all the numbers and we are of the strong belief that there is a substantial under-supply of apartments in Melbourne's inner suburbs," Mr Gurner said.

"Melbourne needs 60,000 new dwellings every year for the next 30 years just to keep up with our population growth, so good quality apartments in the right location that offer access to existing amenity and infrastructure will continue to be in demand for many years to come," he said.

In contrast, he said the number of big, high-rise apartment developments in places such as the CBD and Docklands (which many believe are over-supplied with investor-style stock) was being curtailed by recent regulatory and bank funding changes.

"I strongly believe that markets always self-regulate and that is exactly what is happening in the current environment," he said.

The inner suburbs of Melbourne and Brisbane have helped make Mr Gurner one of the country's richest young developers with BRW estimating his wealth at $460 million. By the end of 2018 he will have completed over 1750 apartments within 700 metres of each other in Collingwood and Fitzroy.

Top suburb picks

"In terms of locations that fit our development philosophy, Collingwood and Fitzroy are among our top suburb picks not only just in Melbourne but Australia-wide," he said.

The Collingwood site was procured off-market in two separate deals; the first being a 4550 sq m parcel at 1-57 Wellington Street and 2-12 Cambridge Street bought from a private Melbourne family, who will remain as joint venture partner for the development.

The second transaction was a 623 sq m collection of commercial buildings at 71–77 Victoria Parade, in a deal with a consortium of private investors including Cantabile Nominees, who will also remain in the project as a partner in the development.

Mr Gurner will submit a planning application in the coming weeks and hopes to begin marketing the project next year.

"Collingwood continues to witness impressive capital growth and is fuelled by a population of young professionals and couples who have embraced apartment living. For us this underpins our development acquisition strategy as it indicates that demand for luxury apartment offerings will remain strong," he said.